D-day nears for Zimbabwe banks

Industry sources said last weekyesterday that the document will outline banks, building societies, merchant banks, and other finance houses that will continue in operation or face the music after the expiry of yesterday’s deadline.

Indications are that the RBZ is not backtracking on the capital levels, and there will not be any extension to the deadline, sources said.

“I am not too sure if all institutions have met the new capital requirements, but I am aware a lot of banks may have well exceeded them,” said a source

All commercial banks were expected to have satisfied the new crawling US$10 million minimum capital thresholds by the end of business tomorrow. The apex bank has made it clear it will wield the axe on institutions that fail to beat the deadline.

However, no official comment could be obtained from the central bank at the time of going to press.

But judging by the June 2006 figures, most commercial banks reported healthy profit margins and had already surpassed the mandatory capital adequacy levels.

Except for Metropolitan Bank, which was lagging in all respects, all other banks had seen shareholders’ funds and capital reserves running up with rights offers also having saved the day for some firms. With just under a day to go, Metropolitan has remained tightlipped on what steps it was making to bolster its capital reserves, which makes it a strong candidate for exiting the banking sector.

Kingdom Bank, which faced critical liquidity shortages early last year, had its $1,5 billion rights issue to thank while CFX Bank may also be protected by its $1,8 billion offer that closed last Friday.

MBCA achieved its recapitalisation levels with little sweat and had the luxury of a further huge cash injection from key shareholders Nedbank of South Africa while FBC Bank, at mid-year, had well over $13 billion on its balance sheet.

NMB also went the rights offer route, as the bank attempted to fight off the high cost of funding and tight liquidity caused by high interest rates and rapid movements in reserve ratios, which has been a source of sleepless nights for the sector.

There isn’t much to talk about at CBZ, Barclays, Stanbic, Stanchart and Zimbank whose liquidity levels have been in doubt, although Barclays may have stumbled this year. ‘ The Herald.

The bank’s asset base, however, remained fundamentally strong.

Various other asset management firms, merchant banks and building societies have also stayed in the black although a few casualties cannot be ruled out.

October 2006
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